Ms Henrieta Jany-Roskova:

I thank the Chair. Good afternoon to the honourable members. I thank them for the invitation to today's technical meeting on the new exclusion from competition rules on sustainability initiatives – Article 210a of the Common Market organisation, CMO, regulation - and the recently adopted guidelines providing further clarifications and guidance. This exclusion has been introduced in the last reform of the CMO regulation by European co-legislators to boost sustainable agricultural production practices and enable co-operation among farmers and other actors within the agrifood supply chain to achieve more ambitious environmental standards.

European competition rules normally prohibit agreements between companies that restrict competition, such as agreements that lead to higher prices or lower quantities, including fixing of prices or quantities. However, the new exclusion under Article 210a of the CMO regulation excludes certain voluntary agreements in the agricultural sector from that prohibition when those agreements are indispensable to achieve sustainability standards going beyond what is mandatory at EU or national level.

The question now is who can benefit from this new exclusion. Farmers are at the core of the new exclusion but, as said previously, other operators necessary to achieve those more ambitious standards can also be part of the agreement, for example, companies supplying inputs for production, distributing, transporting, or packaging the product. Such companies may include retailers or processing companies. At the same time, this means that agreements without agricultural producers cannot benefit from this exclusion. In addition, the agreements must always relate to agricultural products, according to annexe 1 of the treaty. This means agricultural raw materials directly from farming or products with a low degree of processing, such as cheese, milk, vegetable oil, sugar, jams, preserved meat or similar products.

What objectives can be covered under the sustainability agreements to benefit from this new exclusion? The objectives are laid down in Article 210a of the CMO regulation and may involve climate change mitigation and adaptation measures, environmental protection measures, a reduction in pesticides or the use of antimicrobials and antibiotics, and animal health and welfare. However, agreements pursuing economic and social aspects of sustainability objectives, such as those purely directed towards a fair remuneration for farmers or the working conditions of farm workers, fall outside the scope of the exclusion because those objectives are not included in Article 210a of the CMO regulation.

In order to benefit from the exclusion, parties need to agree on the adoption of sustainability standards that are higher than what is mandatory at EU or national level because we need to avoid greenwashing becoming a justification to deviate from competition rules. To benefit from the exclusion, sustainability agreements can only include restrictions to competition that are indispensable, or necessary, in other words, to achieve the sustainability standard. In particular, if there are weaker restrictions of competition that would allow achievement of the sustainability goal pursued, they could be preferred to having stronger restrictions.

The guidelines detail how to assess in practice whether a given restriction of competition is indispensable. For instance, operators can agree on payments to producers to cover additional costs as well as monetary incentives for producers to take the risk of adopting a certain sustainability standard. There is no need to notify the sustainability agreements to the Commission or competition authorities but, due to the novel character of this exclusion, farmers and their associations may request opinions from the Commission on their sustainability agreements in order to obtain legal certainty. The Commission and the national competition authorities may review the agreements ex post in cases where the implementation of a sustainability agreement leads, among other outcomes, to unreasonable consumer prices or to the elimination of certain products from the market for which there is a significant consumer demand. The new exclusion from competition aims at reinforcing co-operation between actors in the whole supply chain, while ensuring that farmers get a fair economic return for their efforts to enhance sustainability of production beyond what is currently mandatory.

I thank members for their attention. I am here to answer their questions.